State regulator says regional hospitals not in jeopardy, yet

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MIDDLEBURY — Vermont’s 14 regional hospitals are performing well and aren’t at risk of being shuttered or consolidated as a byproduct of Vermont’s new health care reform law, according to the state official who is reviewing hospital operations and their proposed spending plans.

Stephen Kimbell, commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration (BISHCA), issued that assurance Tuesday evening during a swing through Addison County. Kimbell and his department have become major players in new reforms aimed at transitioning Vermont to a single-payer health care system by 2017. The foundation of that transition was laid out in Act 48, signed into law by Gov. Peter Shumlin this past spring. That bill, among other things:

•Requires the secretary of administration to develop a financing plan for universal coverage based on a benefits package devised by the Green Mountain Care Board.

•Establishes a Health Insurance Exchange, as required by federal law. The exchange, due to be operational by 2014, will offer insurance plans from at least two private insurers, plus two multi-state plans required by federal law. The exchange is designed to simplify health insurance administration and help people comparison shop for packages that best meet their needs.

The state’s hospitals and their employees will be at the forefront of the many health care changes on the horizon, and they have already begun preparing for the transition by investing in such things as new information technology to better store and access medical records. State law limits the growth in hospital spending, but it allows hospitals to exempt from their budget proposals expenses related to health care reform.

In an interview with the Independent, Kimbell applauded the hospitals for responding proactively. He noted many hospitals have decreased their number of in-patient stays and increased their number of less-costly out-patient services.

“The hospitals have morphed … into something else in many cases,” Kimbell said. “They have made the change without bureaucrats telling them they had to make it.”

And hospitals are taking advantage of those exemptions, or “off-ramps,” as Kimbell calls them. Kimbell is currently reviewing the state hospitals’ budget proposals, which cumulatively request a 4.6 percent increase in net patient revenue compared to this year. The hospitals’ fiscal year 2012 will begin on Oct. 1 and ends on Sept. 30, 2012.

The state target for net hospital revenue next year is 4 percent, Kimbell noted.

He is optimistic that hospital officials will be able to work collaboratively with him to cumulatively take 0.6 percent off the 4.6 increase to meet the net revenue target. That’s about half a percentage point on a $2 billion system, he noted, or around$12 million.

“We can to do it, as long as we don’t talk market share and pricing,” Kimbell said. “We ought to be able to figure this out.”

Middlebury’s Porter Hospital has submitted a request for a $3,084,292 bump in net revenues, a 4.9 percent increase compared to this year, according to figures provided by BISHCA. This request places Porter squarely in the middle of the pack compared to other hospitals’ revenue requests, which range from a 3-percent decrease from Mount Ascutney Hospital in Windsor to a 7.6 increase for Grace Cottage Hospital in Townsend.

Kimbell said Vermont’s hospitals have, by and large, justified their expenses and seem to be operating efficiently. He sought to dispel speculation that some of the hospitals might be on a chopping block.

“It is not on this administration’s agenda to close any of (the hospitals), or force mergers or consolidations of governance,” Kimbell said, noting that such an action — even if desired — would come with multi-year legal entanglements. Instead, Kimbell is emphasizing administrative cooperation between hospitals as a means of saving time and money.

“My pleas to the hospital CEOs and CFOs when I came to this office was, ‘Work with us to build an integrated system of delivery, reduce duplication and everyone get on electronic medical records so we aren’t doing multiple tests,’” Kimbell said, citing imaging and blood work as procedures that are currently needlessly duplicated in some cases.

“We’ve got to have a system where you do it once and you do it right,” Kimbell added.

He also noted an opportunity to save health care dollars through better managing care of around 21,000 Vermonters who currently qualify for services through both Medicare and Medicaid programs.

“There is a huge amount of wasted money here,” he said, noting bureaucratic expenses related to the two programs. Vermont has applied for a federal waiver to co-manage this population of 21,000 Vermonters, who consume a combined total of $550 million in health care services annually, according to Kimbell.

More money must be saved in services delivered to people with chronic diseases and those who frequently use emergency rooms, according to Kimbell.

The insurance industry must also be part of the reform effort, he added.

“We need to consolidate the insurance market, even if we continue with commercial insurers — and the jury is still out on that,” Kimbell said. “We need to have a consolidated market with common products and share risk across as many lives as possible.”

Kimbell is pleased with the extent to which Vermonters are accepting the new health care reforms in hopes of gaining improvement over the current system.

“The only reason we have been able to get as far as we can with this thing is that most people recognize that the current system is going to kill us,” Kimbell said. “(Vermonters) are cutting us a little slack.”

Porter Hospital’s proposed budget, and those of other hospitals throughout the state, will be open for public comment at a hearing on Thursday, Aug. 4, from 1:30 to 5 p.m. Testimony can be delivered locally through the Vermont Interactive Television site at the Hannaford Career Center at 51 Charles Ave.